New Commission Strategy on the Role of the
Private Sector in Development
Seminar “PRIVATE SECTOR’S INVOLVEMENT INTO DEVELOPMENT COOPERATION”
Gediminas’ Hall, Ministry of Foreign Affairs of the Republic of Lithuania
Vilnius, 13 November 2014
Mr Roberto Ridolfi, Director for Sustainable Growth and Development,
DG Development and Cooperation – EuropeAid, European Commission
New
Commission
Strategy on the
Role of the
Private Sector in
Development
Table of contents
1
2
3
4
PRIVATE SECTOR COMMUNICATION
PRIVATE SECTOR ENGAGEMENT
JOINT
ACP-EU
COOPERATION
FRAMEWORK and EU REGIONAL
BLENDING FACILITIES
AGRICULTURE
OPPORTUNITIES
AND
ENERGY
2
Why a Communication on the role of the private sector
in development?
 The new EU development vision ('Agenda for Change') calls for making the
private sector a partner in development cooperation. The Communication
formulates in more operational terms how this can be achieved.
 The EU committed at the Busan High-Level Forum on Aid Effectiveness
to more effective public-private collaboration for development. The
Communication follows up on this commitment.
 The last Communication on the private sector dates back to 2003. The new
Communication updates our private sector development strategy in light
of a changing world.
 The private sector plays a central role in many areas of EU development
cooperation. The Communication provides a strategic framework for
mainstreaming private sector development and engagement across sectors.
 Interactions between donors and the private sector have intensified and
became more complex. The new Communication defines principles and
criteria to guide the EU’s engagement with the private sector.
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Purpose and objectives of the Communication
 Update the EU strategy for private sector development support
in developing countries;
 Identify ways to working closer with the private sector in
development cooperation as announced in the 'Agenda for Change',
and confirmed in the Busan outcome document;
 Using the private sector as “delivery channel” for development
in sectors such as energy, agriculture and infrastructure;
 Propose a framework dialogue and joint action with business to
harness the private sector as a driving force in achieving inclusive
and sustainable growth;
 Elaborate on the role of the private sector in the post-2015
framework, and in the transformation towards a green economy.
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Structure of the Communication
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New
Commission
Strategy on the
Role of the
Private Sector in
Development
Table of contents
1
2
3
4
PRIVATE SECTOR COMMUNICATION
PRIVATE SECTOR ENGAGEMENT
JOINT
ACP-EU
COOPERATION
FRAMEWORK and EU REGIONAL
BLENDING FACILITIES
AGRICULTURE
OPPORTUNITIES
AND
ENERGY
6
Private sector Engagement (PSE)
Finding a common language…
Implementation
partner
Civil Society
Organisations
Multistakeholder
alliances
Donors,
Public Sector
Watchdog of industry
Providing expertise
on local situation
Private
Companies
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CONVERGENCE OF
ACTORS interests
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Strategic areas of Private Sector Engagement in
agriculture
• 1 – Responsible Investment/Land Governance. Strengthening
investment frameworks, public policies. Examples: VGGT, rai.
• 2 – Risk Management. Reducing price and yield risks. Risks are
highest at production stage when values are low. Increased
production and access to finance. Examples: PARM, GIIF, FARMAF.
• 3 – Agriculture Equity Funds. Risk sharing instruments.
Guarantee schemes, interest rate subsidies. Example: AAF-TAF.
• 4 – Market Access/Value Chain Development. 'Traditional'
PSD: PEP, EDES, BTSF, STDF.
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New
Commission
Strategy on the
Role of the
Private Sector in
Development
Table of contents
1
2
3
4
PRIVATE SECTOR COMMUNICATION
PRIVATE SECTOR ENGAGEMENT
JOINT
ACP-EU
COOPERATION
FRAMEWORK and EU REGIONAL
BLENDING FACILITIES
AGRICULTURE
OPPORTUNITIES
AND
ENERGY
10
Joint ACP-EU cooperation framework for
PSD support: provisions on Intra-ACP
The framework is articulated around 4 Pillars:
 To support business-friendly national and regional policies.
 To strengthen production capacities by providing micro-level support to
the private sector and supporting key intermediary organisations.
 To improve access to responsible and sustainable micro-finance services.
 To increase access to finance for SMEs and catalyse private investments
through blending operations.
National, regional and intra-ACP actions must be strongly interlinked:
 To establish a platform for lesson-sharing, dissemination of good practices
and dialogue with the private sector across the ACP regions.
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Blending
Using grants strategically to unlock additional public
and private financing to meet development challenges
LEVERAGE
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13
NIF: € 789 million from ENPI & € 78 million
from Member States, 2007 – 2013
FINANCIAL
CONTRIBUTIONS
From the EU budget and
Member States into the
blending facilities
ITF: € 638 million from the EU (including
SE4ALL) and € 161 million from Member
States
LAIF: € 197 million, 2009 - 2013
IFCA: € 85 million, 2011 - 2013
CIF: € 70 million, 2012-2013
AIF: € 60 million, 2011 - 2013
IFP: € 10 million, 2012-2013
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€1.6 BILLION
LEVERAGED
RESOURCES
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Since 2007 in ITF, NIF,
LAIF, IFCA, AIF
Until end 2013
At least €15 billion are provided by
eligible public finance institutions
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Sectors
covered
Figures since 2007
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BLENDING
FACILITIES –
EXPERIENCE
OF PPPs
• 12 PPP projects have been
financed by EU blending facilities
• 10 in Africa (9 ITF, 1 NIF)
• 1 Latin America
• 1 Caribbean
• Strong emphasis on renewable
energy
• 7 in Energy (most renewable)
• 3 ICT (undersea cables)
• 2 Transport (ports)
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UNLOCKING
PRIVATE
INVESTMENT
With the facilities the
needed tools are in place
Currently the blending facilities mainly support
public investment projects. However, they
also provide the means to catalyse private
investments – particularly by using more
innovative financial instruments such as risk
capital and guarantees.
• Risk capital can help address the lack of
equity
capital
in
some
countries,
particularly for new sectors such as
renewable energy (e.g. GEEREF fund)
• Guarantees are particularly useful in more
liquid markets where the perceived risk of
certain activities is high among local
investors or banks (e.g. SME Guarantee
Facility)
18
New
Commission
Strategy on the
Role of the
Private Sector in
Development
Table of contents
1
2
3
4
PRIVATE SECTOR COMMUNICATION
PRIVATE SECTOR ENGAGEMENT
JOINT
ACP-EU
COOPERATION
FRAMEWORK and EU REGIONAL
BLENDING FACILITIES
AGRICULTURE
OPPORTUNITIES
AND
ENERGY
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Our plans for the Agriculture sector:
The EU has undertaken high level political commitments
1.
Support partner countries in reducing the number of stunted
children by 7 million by 2025
2.
Build resilience
management
3.
Agriculture for growth & job creation, enhancing private
sector activities and agribusiness
4.
Promote a sustainable agriculture through its sustainable
intensification & linking farmers to markets
and
enhance
crisis
prevention
&
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Result of evidence based programing:
Countries with Food Security focal sector 2014-2020
Moldavie
Georgie
Kyrghyzstan
Uzbekistan
Tajikistan
Azerbaijan
Mauritanie
Cuba
Pakistan
Haïti
Suriname
Guatemala
Honduras
Nicaragua
Colombia
Burkina Faso
Sénégal
Afghanistan
Mali
Gambie
Guinée Bissau
Sierra Leone
Libéria
Côte d'Ivoire
Niger
Yémen
Erythrée
Djibouti
Laos
Népal
Nigeria
RCA
RDC
Cameroun
Myanmar
Bhutan
Ethiopie
Somalie
Benin
Sao Tomé & P.
Ghana
Tchad
Ouganda
Kenya
Burundi
Cambodge
Bangladesh
Sri Lanka
Tanzanie
Rwanda
Timor Oriental
Angola
Madagascar
Zambie
Namibie
Malawi
Mozambique
Swaziland
Zimbabwe
Total for the FNS/SA Sector: €8bn
(80%geographic, 20% thematic)
NIP approved
NIP expected
Fidji
Vanuatu
CFS Principles for Responsible Investment in
Agriculture and Food Systems
 Agreement formally endorsed mid-October in Committee on
world Food Security plenary meeting, Rome
 CFS coordinated the RAI process
 Voluntary and legally non-binding principles (international
soft law).
 12 page document contains a set of principles to promote
investments in agriculture that contribute to food security
and nutrition.
 It also sets out the roles and responsibilities of all involved
in agricultural investment.
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10 Principles
1) Contribute to food security and nutrition
2) Contribute to sustainable, inclusive economic
development, poverty eradication
3) Foster gender equality and women’s empowerment
4) Engage and empower youth
5) Respect tenure of land, fisheries, forests and access to
water
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10 Principles (cont.)
6) Conserve and sustainably manage natural resources,
increase resilience, and reduce disaster risks
7) Respect cultural heritage, traditional knowledge, support
diversity , innovation
8) Promote safe and healthy agriculture and food systems
9) Inclusive, transparent governance structures, processes,
grievance mechanisms
10) Assess and address impacts and promote accountability
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EU Investment in agriculture in General
 Approximately € 8.2 billion for period 2014-2020
 Different instruments:
- National, Regional, Intra-ACP
- Global Public Goods and Challenges Programme, DCI
- Specific Initiatives on Horn of Africa (SHARE) and Sahel (AGIR)
New initiatives
 G7 New alliance on Food Security and Nutrition
 SUN – Scaling up Nutrition
Current specific opportunities for private sector
 All ACP Commodities Programme (2014-2017, € 18 million).
 AAF/TAF – African Agriculture Fund (2012-2016, EU TAF
contribution of € 10 million; Fund itself approx. € 150, multidonor).
 PIP - Pesticides Initiative Programme (2010-2014, € 32.5 million).
 GIIF – Global Index Insurance Facility (2009-2016), €24.5 million
 Various programmes at national level. Mostly targeted at
smallholders, SMEs, inclusive business. EU Delegations are in the
lead. Examples: Uganda, Tanzania, Malawi, Papua New Guinea.
The African Agriculture Fund (AAF) and
the Technical Assistance Facility (TAF)
•
•
•
AAF•
•
• TAF
Who: A pool of European and African DFIs
What: Support private sector companies to enhance
and diversify food production and distribution in Africa.
How: By providing equity funding and strengthening
management and company structure
• The AAF has raised $243 million in investment. AAF is
managed by Phatisa.
What: provides technical assistance to agri and food related businesses
that receive investment through the AAF:
•
•
•
capacity building for SMEs invested in by the AAF through its SME Fund
improve linkages between smallholder outgrowers and the companies invested
in by the AAF and
enhance rural financing opportunities in areas where AAF invests
Funded primarily by EC, managed by IFAD and implemented by TechnoServe. It is
also co-sponsored by the Italian Development Corporation, UNIDO and AGRA.
• As of November 2013, 11 TA projects were approved with a value of
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€975,000
Empowering Development - the EU Energy Policy
1. What? Creating an enabling environment
transparency, cost-recovery and reinvestment.
that
allows
 Regulatory framework
 Catalysing private sector investment
2. How?
-
Reforms: Technical Assistance Facility
Investments: Blending (regional blending facilities, GEREEF, EDFIs);
Rural Electrification: Calls for Proposals;
New Business Models for Rural Electrification;
Missing Link: Utilities.
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for
Rural electrification project - example
Micro-Power Economy Tanzania Roll Out
Activities:
•
Electrification of households, businesses, public services and lighting;
•
Support the development of new businesses, particularly in
agriculture;
•
Transformation of the project into a sustainable and profitable Micro
Utility
Expected results: more than 81 000 people in rural Tanzania will
get access to reliable electricity mainly from renewable sources in
mini grids.
Implementing actors: private sector bodies and one University
EU grant: € 7,4 million
Total estimated cost of
the project: € 16 million
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Rural electrification project - example
Rent-to-Own Solar Home Systems - Rwanda
Activities:
•
Rent-to-own finance scheme for solar home systems and inclusion of
mobile money
•
Distribution of business kits to support economic activities
Expected results: more than 49 000 households and 1 000 schools
in rural Rwanda will get access to reliable electricity through solar PV
systems.
Implementing actors: one private sector body and one public
authority
EU grant: € 6 million
Total estimated cost of the
project: € 22 million
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http://ec.europa.eu/europeaid/where/latinamerica/regional-cooperation/laif/index_en.htm
http://ec.europa.eu/europeaid/where/neighbourhood/re
gional-cooperation/irc/investment_en.htm
USEFUL LINKS
http://www.eu-africa-infrastructure-tf.net/
http://ec.europa.eu/regional_policy/sources/
docgener/guides/ppp_en.pdf
http://ec.europa.eu/europeaid/what/economicsupport/private-sector/documents/psdcommunication-2014_en.pdf
More info
EuropeAid-NIF@ec.europa.eu
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Thank you!
Sustainable Growth and Development Directorate
European Commission, DG DEVCO – EuropeAid
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